A prenuptial agreement or marital settlement agreement may be one of the most important documents that you ever sign.  A prenup or settlement agreement might affect your property rights to real estate, retirement assets, investments, vehicles, tangible personal property, debts and alimony obligations in the future. Your entire net worth could be affected by a prenup or settlement agreement, so it is important to ensure that your agreement is carefully drafted, complete, accurate, and well-considered.

What is a prenuptial agreement? A prenuptial agreement (or premarital agreement, which means the same thing) is an agreement between prospective spouses which deals with their property rights in the event of death or divorce or both. Prenuptial agreements may determine which property and debts should be divided upon divorce, which property should be excluded, which property should be excluded from the probate estate when one of the spouses dies, whether alimony should be paid upon divorce or separation, how much, and how long. Some states, including Pennsylvania, allow spouses to enter into prenuptial agreements after they are married (commonly called “post-nuptial agreements”). Some states do not enforce post-nuptial agreements, and some foreign countries do not enforce prenuptial or postnuptial agreements.

How are prenuptial agreements created? Most experienced family lawyers have spent their careers developing effective language to achieve predictable results in their prenuptial agreements. This language must be tailored to the specific needs and circumstances of each client. One of the most important elements of a prenuptial agreement in Pennsylvania is known as “full and fair disclosure,” which is necessary to create an enforceable agreement.

What is “full and fair disclosure”? In order to be enforceable under Pennsylvania law, a prenuptial agreement must contain full and fair disclosure of both spouses’ assets, income and debts. This is necessary in order to ensure that both parties have given their informed consent to the terms of the agreement, that they understand what they are giving up and what they are getting by signing the agreement. The same standards generally apply to marital settlement agreements. Full and fair disclosure may be accomplished in a number of ways, such as attaching schedules of assets and their values to the agreement. Valuation of the assets need not be exact, so long as the schedule of assets gives a reasonable accurate picture of the financial resources of both parties.

It is important to note that prenuptial agreements, and their enforcement, is a matter of state law which differs from state to state. Given the mobility of married people today, it may be worthwhile to consider the contractual requirements of other states where a married couple is likely to reside during their lifetimes.  Some states require more than just full and fair disclosure when called upon to enforce prenuptial agreements. In those states, the agreement must make a reasonable provision for the dependent spouse. Some states utilize different methods for dividing marital property or community property. Careful consideration should be given to the possibility that a married couple may relocate to a state having different contractual requirements for prenuptial agreements.

What is a marital settlement agreement? A marital settlement agreement is an agreement to settle some or all of the economic claims that may arise in a divorce action, such as the division of property, alimony, child support, legal fees, or other rights. In Pennsylvania, a marital settlement agreement requires full and fair disclosure to the extent that the spouses do not have personal knowledge of the nature and value of their marital property. The Divorce Code of Pennsylvania authorizes the courts to treat marital settlement agreements much like court orders in enforcement proceedings. Most provisions of a marital settlement agreement (other than custody and child support) are presumed to be nonmodifiable unless the agreement provides otherwise. For this reason, it is very important to ensure that a marital settlement agreement is complete and accurate.

%d bloggers like this: